Risk Management is one of six components in the
CMCA Study Kit [M5134]
Manage risk by using a five-step decision-making process and implement a risk-management program by engaging in four key activities. Find out when and to whom it's appropriate to delegate risk-management tasks. Learn why insurance alone isn't enough to control risk. Addresses the growing risks for community associations in the Internet age, and how to integrate reserves and risk management programs.
Chapter 1—The Risk Management Process
Primary Exposures to Loss
Step 1—Identifying Exposures to Loss
Step 2—Examining Alternative Techniques
Step 3—Selecting the Best Techniques
Step 4—Implementing Risk Management Techniques
Step 5—Monitoring and Improving the Program
Chapter 2—Establishing a Risk Management Program
Chapter 3—Risk Management in Action
Property Exposures to Loss
Liability Exposures to Loss
Net Income Exposures to Loss
Personnel Exposures to Loss
Chapter 4—Claims and Claims Administration
Reporting Requirements
Reporting Property Claims
Reporting Workers' Compensation Claims
Liability Claims
Monitoring the Claims Process
Claims Settlement Issues
Proof of Loss
Insurer Responses
Adjusters
Insurer Responsibilities
Self-insured Claims and Allocating Responsibility
Appendix A: Insurance Checklist
Appendix B: Risk Management Checklist
Appendix C: Sample Homeowner Insurance Responsibilities
Appendix D: Allocating Master Policy Insurance Deductibles to Unit Owners
Appendix E: Sample Policy Resolution for Funding Catastrophe Insurance Deductibles
Appendix F: Named Insureds, Additional Interests and Lender Interests
Excerpt
Introduction
Risk management is the process of making and carrying out decisions that minimize the adverse effects of accidental losses. It involves five steps:
Identifying exposures to loss
Examining alternative techniques
Selecting the best techniques
Implementing the chosen techniques
Monitoring and improving the risk management program
This guide will examine each phase of the risk management process. It also will help board members and managers identify risks and implement a plan that will safeguard association assets.
Management involves four key activities: planning, organizing, leading, and controlling.
Risk management is a five-step decision-making process that is implemented through those four activities. In this sense, risk management is like any other type of management.
The risk management process begins when the association identifies exposures to loss in four areas: property, liability, net income, and personnel. At this point, the association selects, implements, and monitors a risk-financing plan. The purchase of commercial insurance, although very important, is only one part of that process.
Associations must delegate risk-management tasks to appropriate staff and volunteers to protect their assets from accidental loss. Few associations are large enough to have full-time risk managers.
Claims usually involve the transfer of financial risk to a commercial insurer. However, too much emphasis on insurance minimizes the role of risk control in claims management.
Associations must carefully manage claims to ensure they fully benefit from their insurance program.
A risk management program should always be integrated with a comprehensive insurance program.
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